Value, value, value. So important we've typed it out three times

Betting Strategy / Jack Houghton / 19 July 2008 / Leave a Comment

Jack Houghton opens a series on the science of profitable punting with an explanation of 'value'

Following a glorious foray into the world of tipping, which saw Marchand D'or (selected at [4.4]) win the July Cup, convincingly, by a head; a chap called John has been in touch to ask if us "guys at bettting.betfair.com could do an article(s) on different selecting methods."

Well John, as I'm paid on the basis of my "interactivity quotient" - the number of people who post comments and questions below - and you're one of the first genuine posters for a while (seriously, I'm running out of fake email addresses, help me out if you can), I'll happily oblige. Perhaps some of betting.betfair's other contributors will read this and want to share their own views.

During my time at Betfair and since, I've been lucky enough to know, talk to, and work with, a host of people who make a living from punting. Given their different focuses - some on-course, some off, some online; some flat racing, some jumps; some British racing, some US, some Australian - it's hard to immediately identify a common thread.

But while their specialisms and methods vary, every single long-term winning punter I've met is concerned with identifying value. If they consistently find value, they know they'll profit in the end.

Value is one of the most misunderstood terms in betting. For the record, it means backing something that has a better chance than its odds imply, or laying something that has less of a chance than its odds imply. It is backing a coin toss at 6-4 when the correct price is evens. Or laying 4-6.

It is also rarely the exact science of a coin toss. Deciding on the correct price of a horse is complex and subjective. Nonetheless, it dominates how winners think about punting.

This price-centric approach is different to the horse-centric approach taken by most losing punters. How many times have you analysed a race, decided which horse you think would win, then backed it no matter what the price? If the answer is: "every time I bet", then I'm prepared to say with certainty that you are unprofitable.

This might sound counter-intuitive, but a price-centric punter is not concerned, primarily, with finding a winner. Different to the method outlined above, they analyse a race and create a list of prices they believe each horse "should" be. (This list of prices is often called a "tissue"). They then compare these expected odds with what is available in the market. If the price of a horse is significantly larger than the tissue, then that is the likely best bet in the race.

Take this example from a recent race:

I laid the favourite, who was trading far below its "correct" price, and backed horse C. Horse B went on to win, meaning I neither won nor lost on the race. But using this price-centric approach, providing my method of creating a tissue price is good enough, I know I'll profit in the long-run.

I've laboured this value theme somewhat, but it lies at the heart of all profitable selection methods and so is worth the time spent on it. It is only by making a mind-shift, from finding winners to finding value, that a punter is on the right route to profit.

The obvious question - and I'm guessing this was what John was asking - is: how do you decide what price a horse "should" be? This is more complicated, as there are a variety of methods, all with their own inherent strengths and weaknesses. And I'll look at some of these methods next week.